Patti P. Phillips and Jack J. Phillips

Abstract
Purpose โ€“ Human capital analytics (HCA) is integral to all other human capital processes. With a mature
analytics practice, leaders can make better decisions more quickly and with greater confidences. This
paper aims to describe results of research that shows how organizations in Middle East countries are
investing in HCA. Specifically, it describes as follows: the extent to which they are investing; types of
projects in which they are investing; and factors critical tomaking analytics work.

Design/methodology/approach โ€“ While research may include respondents from organizations in
developing countries, only recently have efforts been made to monitor progress specifically in these
countries. This paper attempts to describe the most recent findings of such research, paying specific
attention to the use of HCA in the Middle East.

Findings โ€“ Organizations in the Middle East embrace HCA. While still in its infancy, analytics is poised to
be a strategic driver that will lead to improved organizational performance.

Originality/value โ€“ Whether investing in leadership development, talent acquisition, employee
engagement or talent development, analytics plays a central role in informing decisions about
people investments. To make HCA work, Middle East organizations plan to continue building
capability through training; embracing technology and striving to link data across programs and
platforms; and integrating systems, processes and people with other functions, particularly finance.
In the end, organizations will seamlessly integrate HCA into all processes to drive organization
performance.

Keywords โ€“ Middle East, Analytics, Human capital, Human capital analytics, Human capital strategy

Paper type โ€“ Research paper

The role of human capital analytics

Analytics is the scientific process of transforming data into insight for making better
decisions (INFORMS, 2015). Human capital analytics (HCA) is the application of analytics in
the context of human resources (HR). Sometimes referred to as talent analytics, people
analytics and HR analytics, HCA is the lynchpin of all thingโ€™s human capital (Ray et al.,
2012). Whether investing in leadership development, talent acquisition, employee
engagement or talent development, analytics plays a central role in informing decisions
about people investments. Figure 1 shows this relationship.
Research on the use of HCA in developed countries is not new. Organizations such as
The Conference Board, Institute for Corporate Productivity, Deloitte, McKinsey, ROI
Institute, etc., routinely check the status of HCA practices. While research may include
respondents from organizations in developing countries, only recently have efforts been
made to monitor progress specifically in these countries. This article attempts to describe
the most recent findings of such research, paying specific attention to the use of HCA in
the Middle East.

Human Capital Analytics in the Middle East

Developing countries are defined as those countries with a slow rate of industrialization and
low per capita gross national income. Revenues are typically driven by government-owned
entities. Table I presents a list of developing countries.

Oil production, higher oil prices, and ongoing measures to promote non-oil sectors have
contributed to positive business sentiment and economic outlook for Western Asia countries
or the Middle East (World Economic Situation and Prospects, 2019) (WESP). Positive
sentiment plus the Middle Eastโ€™s growing digital economy (Elmasry et al., 2016), are leading
organizations to rethink their human capital strategies, which includes positioning HCA as a
key driver. Fawaz Abdulla Al Omran, Director and Head of People at KPMG Al Fozan &
Partners said โ€œthe future of the workforce is changing. Investing in HCA is a way of
unlocking the potential and power of data to help us plan the future of our organizations
rather than reacting to changeโ€ (HR Summit & Expo, 2018, p. 8).

Investment in Human Capital Analytics

A 2015 Chartered Institute of Personnel and Development (CIPD) study found that
organizations in the Middle East are using analytics to tackle some of their most pressing
human capital issues including talent pipeline planning, organizational development,
engagement and learning and development. In total, 71 per cent of its survey respondents
felt that HCA was helping them understand their business culture and 76 per cent said it

 

 

 

 

was helping them understand business performance. While the HCA practice within Middle
East organizations is in the very beginning stages, organizations are making progress,
which includes committing resources to the practice.

High performing organizations with headquarters primarily based in the USA, are 1.7 times
more likely to report dedicating resources (budget and people) to people analytics than
lower performing organizations. They are 2.8 times more likely to be planning to add at least
two full-time equivalents to their people analytics function during 2019 (Institute for
Corporate Productivity, 2018). While this research does not assume a cause and effect
relationship, it does suggest that as an investment in HCA increases there is positive
movement in organization performance.

Organizations in the Middle East are making similar investments with the hopes of
driving performance. In 2018, HR Summit and Expo, the Association for Talent
Development (ATD) and ROI Institute showed that of 457 survey respondents from
organizations located in the Middle East, 56 per cent reported their organizations
currently dedicate resources to HCA. Of the 44 per cent not currently committing
resources, 48 per cent indicated that they intend to do so at some point in the future.
For those who are investing, 54 per cent use one to four full-time equivalents to support
analytics activities.

Types of Human Capital Analytics Projects

HCA projects in which organizations are investing vary depending on the types of questions
people ask about HR investments. Regardless of the specific project, all projects fall into
one of five types as follows:

  1. Developing relationships between variables (e.g. connecting employee engagement to
    patient experience).
  2. Developing predictive models (e.g. predicting optimal number of direct reports).
  3. Converting data to money (e.g. job engagement converted to monetary values).
  4. Measuring impact and return on investment (ROI) of a program or project (e.g.
    measuring the impact of a talent acquisition process; demonstrating the ROI of a
    leadership development program).
  5. Forecasting ROI (e.g. forecasting the ROI of a wellness initiative).

Organizations most typically pursue analytics projects that demonstrate
relationships between variables. This type is followed closely by projects that
measure impact and ROI (HR Summit and Expo, 2018). Figure 2 presents the
frequency with which organizations pursue the five types. These results are not
surprising because of the importance of connecting the HR investment to business
outcomes (Evolution of HR: A Middle East Perspective, 2015). Previous studies
asking the same question found that developing relationships between variables and
measuring impact and ROI were the two most frequently pursued HCA projects
(Institute for Corporate Productivity, 2016 and 2018).

Critical success factors

The keys to success with HCA in the Middle East and other developing countries rest in the
following:

  • building capability;
  • ย embracing technology; and
  • integrating systems and processes.

Building capability. The 2018 HR Summit and Expo, ATD and ROI Institute study found the
competency most important to Middle East organizationsโ€™ HCA practices is business
operations. This is closely followed by human resource management systems and
change management. Business acumen and oneโ€™s ability to think like the business is
key to an organizationโ€™s success. Human resource management systems are important
to collecting, analyzing, monitoring and managing data. Change management is central
to success with implementing actionable insights. Together, these competencies
enable HR leaders and practitioners to better align HR investments with an
organizationโ€™s need and execute solutions effectively.

Respondents indicated that the largest gap in capability is with qualitative
methodologies. Other research showed the same competency gap (i4cp, 2018 and
2016). As analytics practices mature, the importance of qualitative methodologies will
become more evident. Michael Arena, Chief Talent Officer of General Motors and author
of Adaptive Space: How GM and other companies are positively disrupting themselves
and transforming into Agile Organizations, complements quantitative techniques with
qualitative methodologies such as ethnography. While statistical data can lead one
down a path, by combining statistics with observational data, his team gets a clearer
picture. As he said, โ€œat some point, you have to go out there and see what is going onโ€
(Phillips and Ray, 2017).

Closely following the qualitative methodologies gap is psychometrics and change
management. Psychometrics, while a competency gap, does not rise to the importance as does change management, with over half of survey respondents identifying change
management as important to the HCA function. Only one-third of the responses indicated a
gap in change management competency; yet, it ranks as third in terms of most lack
competency. Because of its importance, it would be prudent of Middle East organizations to
address that gap (HR Summit and Expo, 2018). Change management is central to the
success of implementing actional insights and optimization of results that come from HCA.
Table II compares the competencies most important to HCA and those for which Middle
East organizations are most lacking.

Embracing technology. Technology drives HCA. Through technology, practitioners can
collect and analyze data with greater speed and accuracy than ever before. Next, to
talent management, technology is the biggest trend in HR in the Middle East (Top HR
Trends Report, 2019). In total, 73 per cent of respondents to the 2018 HR Summit, ATD,
and ROI study ranked technology as important to very important in addressing the HCA
gap. On average, organizations spend 21 per cent of their HR budget on technology.
Those who are just in the beginning stages spend approximately 17 per cent of their
budget on technology; and those making progress spend 26 per cent. This spend is
expected to grow to about 31 per cent. While Excel ranks the highest in terms of
specific tools used to support HCA, the greatest technology need is in supporting
practitioners as they try to link data across programs and platforms (Abdelhay et al.,
2018; Evolution of HR: A Middle East Perspective, 2015).

Integrating systems and processes. Technology is key to seamless integration of HCA
throughout the organization. Using data routinely and in real-time will allow decision-makers
to make investment decisions based on performance, risk and opportunity quickly and with
confidence. This ability to make quick decisions is important for developing an agile
workforce. To be truly agile takes more than technology, however, it takes an organization
designed to make the most of analytics โ€“ one that integrates data, people and processes.
Middle East organizations appear to more likely integrate HCA with finance than with
any other function. This is followed by performance management and compensation
and benefits. Integrating with compliance and risk, diversity and inclusion, and change
management is far less common. While these results differ slightly from other studies
asking a similar question (i4cp, 2016 and 2018), it is important to note that integration
with finance is important if the analytics function is to thrive (Phillips and Phillips, 2019).
Figure 3 shows he frequency with which HCA is integrated with other functions in
organizations.

Integration does not necessarily mean and straight-line reporting relationship, however, that
can happen (Austin, 2018). It does mean that technology systems align, and people
collaborate. If organizations are to leverage analytics to drive human capital strategy,
thereby driving business performance, structural boundaries must be lowered, ideas must
be shared, and technologies must align with the needs of the organization, not merely
specific functions within the organization. HCA should be an ongoing, seamless process
that informs decisions and leads to actionable insights about investments in people,
programs and projects (Fitzenz et al., 2012).

Summary

Organizations in the Middle East embrace HCA. While still in its infancy, analytics is poised
to be a strategic driver that will lead to improved organizational performance. Middle East
organizations dedicate resources including using full-time equivalents to perform analytics
activities. Projects primarily focus on developing relationships between variables and
demonstrating the impact and ROI of programs and projects.

Competencies most important to Middle East organizationsโ€™ HCA practices are
business operations, human resource management systems and change
management. Change management is central to success with implementing actional
insights. Because it is one of the competencies for which there is the greatest gap in
proficiency, Middle East organizations would be prudent to focus training efforts in
that direction.

To make HCA work, Middle East organizations plan to continue building capability through
training; embrace technology and strive to link data across programs and platforms; and
integrate systems, processes, and people with other functions, particularly finance. In the
end, organizations will seamlessly integrate HCA into all processes in an effort to drive
organization performance

References

Austin, K. (2018), โ€œHow Pizza Hut became UKโ€™s โ€˜Best Restaurant Chainโ€™ through revolutionising their
people strategy and proving it on the bottom line. Keynote presentationโ€, 2018 HR Symposium and ExpoDubai International Convention and Exhibition Centre.

Elmasry, T., Benin, E., Patel, J. and auโ€™s dem Moore, J.P. (2016), โ€œDigital middle east: transforming the
region into a leading digital economyโ€, Digital McKinsey, McKinsey & Company, available at: www.
mckinsey.com//media/mckinsey/featured%20insights/middle%20east%20and%20africa/digital%
20middle%20east%20transforming%20the%20region%20into%20a%20leading%20digital
%20economy/digital-middle-east-final-updated.ashx

Evolution of (2015), HR: A Middle East Perspective, โ€œChartered Institute for Personnel and Development
(CIPD)โ€, available at: www.cipd.asia/images/evolution-of-hr-analytics-a-middle-east-perspective_tcm23-
22426.pdf

Fitzenz, J., Phillips, P.P. and Ray, R.L. (2012), โ€œHuman capital analytics: a primerโ€, The Conference
Board, Research Report 1500.

HR Summit and Expo (2018), โ€œThe state of human capital analytics in the Middle Eastโ€, Association for
Talent Development (ATD), and ROI Institute, available at: https://roiinstitute.net/wp-content/uploads/
2018/11/HRSE.pdf

INFORMS (2015), โ€œBest definition of analyticsโ€, available at: www.informs.org/About-INFORMS/News-
Room/O.R.-and-Analytics-in-the-News/Best-definition-of-analytics

Institute for Corporate Productivity (2016), โ€œThe promising state of human capital analyticsโ€, available at:
i4cp.com

Institute for Corporate Productivity (2018), โ€œFour ways to advance your people analyticsโ€, available at:
i4cp.com

Phillips, P.P. and Phillips, J.J. (2019),ROI Basics, 2nd ed., ATD Press, Alexandria, VA.

Phillips, P.P. and Ray, R.R. (2017), โ€œHCA practice profile: general motorsโ€, Human Capital Analytics at
Work, The Conference Board. Research Report R-1614-RR, New York, NY, Vol 2 pp. 14-20.

Ray, R.L., Mitchell, C., Abel, A.L., Phillips, P.P., Lawson, E., Hancock, B., Watson, A. and Weddle, B.
(2012), โ€œFalse summit: why the human capital function still has far to goโ€, McKinsey & Company and The
Conference Board, Research Report 1501.

Top HR Trends Report (2019), โ€œA study by HR summit and expo, the talent enterprise, and the HR observerโ€,
available at: www.informa-mea.com/wp-content/uploads/2019/01/top-hr-trends-report-2019.pdf

World Economic Situation and Prospects (2019), โ€œUnited Nations department of economic and social
affairs (UN/DESA)โ€, The United Nations Conference on Trade and Development (UNCTAD) and the five
United Nations regions commissions (Economic Commission for Africa (ECA), Economic Commission for
Europe (ECE), Economic Commission for Latin American and the Caribbean (ECLAC), Economic and
Social Commission for Asia and the Pacific (ESCAP) and Economic and Social Commission for Western
Asia (ESCWA); and the UN World Tourism Organization (UNWTO).

Further reading

Scroogle, E. and Korkmaz, Oยจ . (2012), โ€œMeasuring the ROI in business performance managementโ€, in
Phillips, P.P. and Phillips, J.J. (Eds), Measuring ROI in Learning and Development: Case Studies from
Global Organizations, ASTD Press, Alexandria, VA, pp. 267-294.

About the authors

Patti P. Phillips, PhD, is CEO of ROI Institute and serves as a member of the Board of
Trustees of the United Nations Institute for Training and Research (UNITAR). In addition, she
serves as Chair of the Institute for Corporate Productivity (i4cp) People Analytics Board;
Principal Research Fellow for The Conference Board; Chair of the Board of the Center for
Talent Reporting; and ATD CPLP Certification Institute Fellow. Patti also serves on the
faculty of the UN System Staff College in Turin, Italy. Patti P. Phillips is the corresponding
author and can be contacted at: patti@roiinstitute.net

Jack J. Phillips, PhD, is a world-renowned expert on accountability, measurement, and
evaluation. Dr. Phillips provides consulting services for Fortune 500 companies and
major global organizations. The author or editor of more than 100 books, Dr. Phillips
conducts workshops and makes conference presentations throughout the world. Phillips
has received several awards for his books and work. On three occasions, Meeting News
named Dr Phillips one of the 25 Most Influential People in the Meetings and Events
Industry, based on his work on ROI for the industry. The Society for Human Resource
Management presented him an award for one of his books and honored a Phillips ROI
study with its highest award for creativity. The American Society for Training and
Development gave him its highest award, Distinguished Contribution to Workplace
Learning and Development, for his work on ROI. He is chairman of ROI Institute.